Posted by David Hyman:
Damage Caps and Medical Malpractice Litigation
http://volokh.com/archives/archive_2008_11_30-2008_12_06.shtml#1228240927
Thanks Eugene, for inviting me to join the conspiracy � and [1]thanks
to those who welcomed me in advance of my actually doing anything to
deserve such treatment. To be sure, as a former employee of the
Federal Trade Commission, the whole conspiracy thing is a bit
disconcerting. Thankfully, this particular conspiracy is to promote
(rather than restrain) trade � this time, of ideas.
Yesterday�s Wall Street Journal had an [2]op-ed on the virtues of caps
on non-economic damages in medical malpractice cases. Non-econ caps
are ground zero in the debate over medical malpractice reform.
To proponents, non-econ caps are a silver bullet, simultaneously
targeting frivolous lawsuits, excessive damage awards, run-away
juries, and high medical malpractice premiums. To critics, non-econ
caps are both ineffective (since they will not lower malpractice
premiums or the cost of health insurance coverage) and unfair (since
they reduce damage awards to the most severely injured, and
disproportionately affect women, children, and the elderly).
I�ve spent the past few years doing a series of empirical papers on
medical malpractice, with several co-authors from the University of
Texas (Charlie Silver, Bernie Black, and Bill Sage), and Georgetown
(Kathy Zeiler), including a forthcoming [3]paper in the Journal of
Legal Analysis estimating the impact of such caps. So, I thought I�d
join the Conspiracy by highlighting some of our findings, in this and
other works, which call into question/complicate some of the claims in
the WSJ editorial.
Today, I'll provide general background on damages caps. Tomorrow, I'll
address the impact of damages caps on verdicts and payouts in tried
cases, and payouts in settled cases. After that, I'll address the
issue of damages caps and access to medical services. Finally, I'll
turn to the larger social policy issues raised by damages caps.
Let me start with some general background. In malpractice cases, one
can recover two types of compensatory damages: economic, and
non-economic. Economic damages are things like lost wages and medical
expenses. Non-economic damages are less concrete, and include things
like pain and suffering, loss of enjoyment of life, loss of
consortium, and the like.
Non-economic damages have been a frequent target of tort reformers,
beginning with the successful campaign to adopt a cap on such damages
as part of the Medical Injury Compensation Reform Act (�MICRA�)
enacted by California in 1975. Over the intervening years, campaigns
have been fought to enact damages caps in numerous states. The
campaign to enact such caps is usually triggered by a malpractice
"crisis,� marked by sudden and dramatic increase in malpractice
premiums.
Several states have enacted non-econ caps only to see them struck down
by the state Supreme Court. This is what happened in Illinois several
decades ago, and we are waiting to see whether it will happen again --
although I wouldn't bet on it this time around.
Although it is common to speak of non-econ caps as a unitary entity,
they actually come in numerous varieties, reflecting the design
choices of each individual state legislature. Consider a couple of the
moving parts:
* What should the dollar level of the cap be set at?
* Should the dollar level of the cap be indexed for inflation?
* Should the cap vary by the number and type of defendants? For
example, should doctors have a lower cap than hospitals? What
about a case in which there are both types of defendants? Should
separate caps apply to each?
* Should the cap cover non-economic damages, total damages, or both?
* Should there be a separate cap on punitive damages (which are rare
in malpractice cases against doctors and hospitals, but less so in
cases against nursing homes)?
* Should the cap only cover medical malpractice, or should it apply
more broadly?
* Should cases in which the plaintiff is deceased have a different
cap level than those in which the plaintiff is not?
At present, 31 states have caps on non-economic damages or total
damages or both. (I exclude caps on punitive damages to keep things
simpler). The Table below provides a brief summary of the cap that is
in effect in each state, sorted by cap type and level.
Thus, there are 24 different variations among the 31 states that have
adopted a damages cap. The most popular cap is the flat $250,000 cap
chosen by California, and since copied by four other states. Those
looking for a deep principle of justice explaining the logic of this
cap level should prepare themselves for disappointment: as this
first-rate [4]student note carefully documents, the level of the
California cap was quite arbitrary. As part of her research, the
author emailed the principal legislative sponsor, and asked him why
they settled on $250,000, and received the following response:
The theory was that you could never really and adequately
compensate for pain and suffering, no matter how much money you
provided. Money just doesn�t do it. But $250,000 (in addition to
meeting the medical and other needs of the patient), properly
invested to the extent that it elevated the quality of life over
and above the post-injury status, was thought to be enough to do
that job.
That�s enough for my first-ever blog posting. Tomorrow, I'll address
how damages caps affect payouts, including their interaction with
plaintiff demographics.
References
Visible links
1. http://volokh.com/archives/archive_2008_11_30-2008_12_06.shtml#1228179990
2. http://sec.online.wsj.com/article/SB122809479886668021.html
3. http://ssrn.com/abstract=1087679
4. http://www.law.harvard.edu/students/orgs/jol/vol43_1/edwards.pdf
Hidden links:
5. file://localhost/files/davidh-Caps_Table.jpg
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